1995 (10) TMI 198 - AT - Central Excise

Summary

Issues:
1. Levy of duty and penalty under the Central Excises and Salt Act, 1944.
2. Applicability of the proviso in Section 11A of the Act.
3. Bar on demand by limitation.
4. Interpretation of the role of the supplier in manufacturing goods.
5. Eligibility for Modvat credit.
6. Imposition of penalty.

Analysis:
1. The appeal challenged the order of the Collector of Central Excise imposing a duty and penalty under the Central Excises and Salt Act, 1944. The appellant was alleged to have assembled and manufactured a diesel generator set without paying duty, leading to the impugned order.

2. The appellant's counsel did not contest the dutiability of the goods but argued that the demand was time-barred due to the appellant's bona fide belief that the goods were not dutiable. The counsel cited Trade Notice 137/90 and relied on previous tribunal rulings to support the plea of bona fides.

3. The Departmental Representative adopted the reasoning in the impugned order, supporting the levy of duty and penalty. The Tribunal acknowledged that the goods were excisable, and the only issue raised was the sustainability of the demand based on limitation and the appellant's bona fides.

4. Upon review of the evidence and agreements between the appellant and the supplier, the Tribunal concluded that the supplier was not the manufacturer of the goods. The Tribunal found no merit in the argument that the supplier should be considered the manufacturer, upholding the impugned order as legally sustainable.

5. The appellant sought Modvat credit and was directed to provide details of the components and their duty paid status for consideration by the adjudicating authority. The Tribunal allowed the appellant to pursue Modvat credit eligibility.

6. The appellant's counsel argued against the imposition of the penalty, contending that it was unwarranted in the circumstances. Considering the facts and circumstances, the Tribunal set aside the penalty but confirmed the duty levied under the impugned order. Consequently, the appeal was dismissed with modifications as stated.